Technical Analysis of Market Positioning

The latest Commitment of Traders (COT) report shows how traders were positioned ahead of the US election. The report provides insights into the market sentiment and positioning of large speculators, asset managers, and other participants.

Key Findings

• Traders were net-long USD futures for a fifth week heading into the election.
• Asset managers continued to pile into long VIX bets ahead of the election, pushing net-long exposure to a 2-year high.
• Both sets of traders derisked from gold and silver futures by trimming longs and shorts.
• Large speculators increased net-short exposure to JPY futures to a 14-week high.
• Dovish bets for the BOC and RBNZ saw large speculators increase their net-short exposure to NZD/USD futures to an 11-week high and CAD futures a 12-week high.
• Yet AUD/USD bucked the commodity FX trend with large speculators increasing net0-long exposure to a four-week high.
• Gold and silver traders reduced net-long exposure for a second consecutive week.

Implications for Traders

The COT report provides valuable insights into market sentiment and positioning. Traders can use this information to make informed decisions about their own trading strategies.

For example, the report suggests that traders were cautious with USD, gold, and VIX ahead of the election. This indicates that there was a lot of uncertainty surrounding the outcome of the election and its potential impact on the markets.

Traders who were positioned correctly ahead of the election could have profited from the subsequent market moves. For example, traders who were net-long USD futures could have seen their positions increase in value as the USD strengthened after the election.

Conclusion

The COT report is a valuable tool for traders who want to gain insights into market sentiment and positioning. By understanding how other traders are positioned, traders can make more informed decisions about their own trading strategies.